The markets will be left to their own devices as this week kicks off as there are no new catalysts to provide direction. While optimism on the recovery will continue to underpin Wall Street, the fresh highs on the Dow and S&P at 34,200 and the S&P 500 just shy of the 4200 levels may keep buyers sidelined for now. Treasuries held recent gains with the 10-year yield at 1.575%, the bond at 2.260%, and the 2-year at 0.165%, and could continue to consolidate around those levels near term.
Key Drivers for the Week of April 19
TIP – This is a 1-minute brief bullet-point summary. It is a tool that gives investors and financial a fast and simple list of what to watch for and talking points for the week.
- Optimism rising as global growth picks up steam in Q2, led by U.S. and China
- Inflationary pressures accelerating, as CBs foretold, seen as transitory
- Virus infections, new strains, difficulties in vaccine rollouts remain headwinds
- ECB meeting in focus, watch for signals on PEPP program
- Earnings reports dominate U.S. calendar; housing, durables data on tap
- Bank of Canada on hold, but could show concerns over the strong housing market
- Bank Indonesia policy is seen steady; Japan trade, tertiary index, national CPI due
- RBA minutes may reveal some worry over side effects from low rate policy
- Eurozone manufacturing, services PMI preliminary confidence; German PPI
- UK data includes employment, CPI, retail sales, preliminary PMI surveys
China Q1 GDP posted a record 18.3% rate of growth on the heels of the blowout U.S. jobs and retail sales data, adding to the optimism over the global recovery. That outlook has seen Wall Street and the DAX climb to record highs, along with the World MSCI.
Central bank commitment to accommodation and hefty fiscal stimulus remains big supports to the recovery, and to the rally in the financial markets. Headwinds from the resurgent infections in some regions/countries, along with difficulties in vaccine rollouts, are being overshadowed, though will continue to be closely monitored. Inflation fears have been tempered as well. The ECB meeting will vie with earnings for the markets’ attention this week. Inflation data will highlight around many parts of the world and acceleration is generally expected.
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Earnings will dominate the news flow today amid a paucity of data and Fedspeak. Today’s announcements include Coke, United Airlines, American Airlines, J&J, P&G, Netflix, Dow, Abbott Labs, American Express, Kimberly-Clark.
There is no data today, but the week will see the release of new and existing home sales and jobless claims. Fedspeak goes into hibernation ahead of the April 27-28 FOMC. Supply is relatively thin with just the 20-year and 5-year TIPS sales, though the corporate calendar is growing with banks coming to market after the Fed let SLR relief measure expire.